Oct. 22, 2007
Questions on Health Care Savings Plan?
In January of 2008, all MAPE employees with five or more years of state service began contributing 1 percent of their gross earnings subject to retirement to the Health Care Savings Plan (HCSP). The Minnesota State Retirement System (MSRS) is the plan administrator.
The 1 percent deduction from gross salary for deposit in your HCSP accounts will begin with the pay period ending Jan. 22, 2008, (checks dated Feb. 1, 2008.) For the average MAPE member, this will amount to approximately $20 per paycheck; since your account is tax-free, the net change in the average paycheck will be approximately $14 less in take-home pay.
Q: What is the HCSP?
A: The HCSP is an individual tax-free savings account to be used for your future medical costs, including health insurance premiums, after separation of employment. The HCSP is not health insurance.
Q: Why is the HCSP mandatory?
A: Your HCSP is “tax-free-in” and “tax-free-out.” For the deposits to be tax-free, all of the earnings and interest to be tax-free, and all of the withdrawals to be tax-free, the HCSP must be a mandatory program. Employees cannot be allowed to choose the amount to be deposited. However, some employees may be able to opt out of participation if they are not U.S. residents (i.e. - foreign nationals) or if they are eligible for lifetime health insurance at little or no cost – please contact MSRS for more information.
Q: What about my severance pay (sick leave) … Where does that go? How about vacation time?
A: If you are eligible for severance pay (per the MAPE contract), your payoff for unused sick leave goes into the same account as the 1 percent salary contribution. The new MAPE contract also requires your vacation payout to go into your HCSP account unless used up prior to termination. For both, the exception is in the case of layoff or death.
Q: Can I choose my own investments like I can with the Minnesota Deferred Compensation Plan?
A: Yes. Each employee controls his or her own investment options. Investment choices range from more conservative options such as fixed interest and money market to riskier options such as the growth share account and the international account. Investment choices may be changed monthly among any of the seven different fund options. Please consider all investment risks as some of the fund options can lose value depending on market conditions. All of your investment earnings are also tax-free.
Additional questions are answered on the MSRS website at the following address: www.msrs.state.mn.us/hcsp/feat.htmls
